Ignorance is bliss for the patentee, but best method may be a problem for other divisional applications

In what is becoming a series of articles (see here and here), we bring another tale of the hazards of Australia’s requirement to disclose the best method of performing the invention. In Dometic Australia Pty Ltd v Houghton Leisure Products Pty Ltd[2018] FCA 1573, the Patentee has survived a best method attack, but this decision may have severe ramifications for other divisional applications.

Background

The patent in suit, Australian Innovation Patent No 2016101949 (the Patent), is directed to an air conditioning system, for use in confined areas such as caravans and motor homes, that allows better management of the flow of air back into the return air inlet port, by avoiding the air being drawn back into the return air inlet port without having travelled far enough to cool the air space or the occupants. The Patent was the subject of infringement proceedings and a cross-claim for revocation on a number of grounds including lack of novelty, lack of enablement, lack of support, lack of clarity and failure to disclose the best method. This article focusses on the best method attack.

The best method of performing the invention employed the Coandă effect, which is described by one of the inventors as “a physical effect which causes a fluid jet to stay attached to a surface over which it is flowing” and “the tendency of a jet of fluid emerging from an orifice to follow an adjacent flat or curved surface to entrain fluid from the surroundings so that a region of low pressure develops”. That inventor, Bruce Henshall, determined that the Coandă effect could be achieved by having particular features on and adjacent to the air outlets so that the air ejected by the air conditioning unit travelled some distance horizontally in close proximity to the roof of the caravan, thereby enhancing the dissemination of the cooler air.

The specification of the Patent did not refer to the Coandă effect or of the means by which the invention produces it, so a person seeking to replicate the invention would have to engage in a process of trial and error similar to that undertaken by Henshall.

Who knew what, and when?

The Patent was filed as a divisional application and the timeline prior to the filing of this application was critical to the findings on best method.

2012-2013: While employed by Aircommand Australia Pty Ltd (Old Aircommand) and then a subsidiary of Atwood Australia Holdings Pty Ltd (Atwood) also called Aircommand Australia Pty Ltd (New Aircommand), Henshall (together with the co-inventors) develops the invention, including the best method of performing the invention.

6 March 2014: New Aircommand files a provisional application for the invention

17 October 2014: Dometic Sweden acquires all of the shares in Atwood and New Aircommand became an indirect subsidiary of Dometic Sweden.

6 March 2015: New Aircommand files a complete application for the invention (the parent case).

It was accepted that it is “likely” Henshall had disclosed the details of the invention, including the best method, to New Aircommand’s patent attorneys for the purposes of preparing the provisional application and the parent case.

6 December 2015: Henshall ceases his employment with New Aircommand, but leaves files relating to the development of the best method

March 2016: New Aircommand assigns the parent case to Dometic Sweden.

7 November 2016: The application for the Patent is filed, by Dometic Sweden, as a divisional application of the parent case. The patent attorneys engaged by Dometic Sweden to file the application for the Patent are different from the patent attorneys that drafted the parent case.

So, when the parent case was filed, an employee (Henshall) of the applicant (New Aircommand) knew the best method and had disclosed it to the applicant’s patent attorneys.

As for when the Patent was filed, it was contended that Dometic Sweden had sources of knowledge of the best method: the files of Mr Henshall and of New Aircommand’s patent attorneys. This contention was not accepted by the Court for the following reasons:

“Control of a source of knowledge cannot be equated with knowledge of the information contained in that source. One’s possession of an encyclopaedia does not mean that one knows the content of the encyclopaedia.”

The information in Henshall’s files was inadequate to convey to Dometic Sweden knowledge of the best method of performing the invention.

Dometic Sweden claimed privilege with respect to the files of New Aircommand’s patent attorneys.

No individual was identified as having knowledge of the best method that could be regarded as the knowledge of Dometic Sweden. It was not contended that the knowledge of Mr Henshall should continue to be attributed to Dometic Sweden after his employment had ceased. Also, it was not contended that the knowledge of New Aircommand’s patent attorneys should be attributed to Dometic Sweden.

Thus, when the application for the Patent was filed, the applicant (Dometic Sweden) did not have knowledge of Henshall’s best method.

Which date?

The alleged infringers asserted that the date for the best method should be the date from which the patent monopoly dates: the filing date of the parent case which is the effective filing date of the divisional application. The alleged infringers relied on Rescare Ltd v Anaesthetic Supplies Pty Ltd (1992) 111 ALR 205 (Rescare) per Gummow J at 223:

Sections 67 and 68 of the 1952 Act provided for a term of a standard patent of 16 years, reckoned from the date of the patent, this being the date on which the complete specification was lodged. The adequacy of the disclosure should be judged by reference to the time from which dated the monopoly granted the applicant in exchange for the disclosure. In the present case that is the international filing date, 23 April 1982. This is the date from which the term of the patent runs.

However, the Court took the view that the best method known to the applicant at the time the complete specification for the divisional application is filed is the one that must be disclosed. As the applicant (Dometic Sweden) did not have knowledge of Henshall’s best method, the best method attack failed.

Different standards for parents and divisional applications

In reaching the view the that the relevant date of the best method was the date of filing the complete specification for the divisional application, the Court noted that the position in Rescare was clarified by French and Lindgren JJ in Pfizer Overseas Pharmaceuticals v Eli Lilly & Co [2005] FCAFC 224 (Pfizer). In particular, their Honours were considered to have confirmed that it is the best method known to the applicant at the filing date which must be disclosed in the complete specification. We will revisit Pfizer below.

In addition, the Court considered the post-Raising the BarPatents Act supported the conclusion that the relevant date is the actual date of filing the complete specification. Section 29(4) specifies that a patent request in relation to a complete application must be in an approved form and accompanied by “a complete specification”. The term “complete specification” is defined in Schedule 1 to the Act as: “a specification filed in respect of a complete patent application or, if the specification has been amended, the complete specification as amended”. The Court then stated at [231]:

Section 40(2) is concerned with the content of a complete specification. The remaining subsections in s 40 also impose obligations with respect to the complete specification. They do so in a manner suggesting that compliance is required at the time of filing of the specification. That scheme suggests naturally that, putting to one side the possibility of subsequent amendment, the disclosure required by s 40(2)(aa) must occur in the complete specification when it is filed.

The outcome of this decision is that, although the parent case and divisional application have the same effective filing date, a different date applies to the assessment of whether the best method has been disclosed. If you are feeling déjà vu about differing standards applying to parent cases and their divisionals, we do not blame you. In Mont Adventure Equipment V Phoenix Leisure Group [2009] FCAFC 84 (Mont Adventure), the Full Court considered the meaning of the phrase ”the filing date of the complete application” and overturned the decision at first instance by finding that Australia provides a full twelve month grace period to divisional patents as the relevant date was the effective filing date of the original parent application.

Mont Adventure was not considered in the present decision. There seem to be parallels between the issues in Mont Adventure and the present case, and there seem to be questions about the outcome on this matter.

Pfizer revisited

When Pfizer considered Rescare, it was determining whether a patent was invalid if the best method was omitted at filing, but later added by an amendment.

Pfizer notes at [374], with reference to Firebelt Pty Ltd v Brambles Australia Ltd [2000] FCA 1689; (2000) 51 IPR 531 (Firebelt) at 544, that the requirement that an applicant disclose the best method known to the applicant of performing the invention safeguards against an applicant’s holding back with a view to getting the benefit of the patent monopoly without conferring on the public the full consideration for the grant of that monopoly.

Rescare is discussed at [377]-[380] of Pfizer and those paragraphs are reproduced below:

[377] Gummow J traced the history of the requirement of disclosure of best method, and concluded (at 223):

‘Sections 67 and 68 of the 1952 Act provided for a term of a standard patent of 16 years, reckoned from the date of the patent, this being the date on which the complete specification was lodged. The adequacy of the disclosure should be judged by reference to the time from which dated the monopoly granted the applicant in exchange for the disclosure. In the present case that is the international filing date, 23 April 1982. This is the date from which the term of the patent runs.’

[378] In Rescare his Honour was concerned with the date as at which the best method known to the applicant for the patent is to be identified. This is shown by the genesis of the issue described above: was the specification deficient for disclosing only the two tube method and not the better one tube method?

[379] Once it is accepted, however, that an applicant for a patent must disclose the best method known to the applicant at the date of filing, it is also not difficult to think, as Gummow J appears to have done and as we do, that disclosure must be made in the complete specification when it is filed. Lest there be any doubt, we would make it clear that s 40(2)(a) requires an applicant for a patent to disclose in the complete specification at the time of filing it the best method of performing it known to the applicant at that time: cf C Van Der Lely NV at 56 and Rediffusion Simulation Ltd v Link-Miles Ltd [1993] FSR 369 at 405, which were decided on ss 4(3)(b) and 32(1)(h) of the Patents Act 1949 (UK).

[380] In our view, however, this does not resolve the issue raised by Lilly’s notice of contention, which is whether a failure to disclose on that date the best method then known to the applicant cannot in any circumstances be overcome by later amendment of the specification. In Rescare, Gummow J did not have to consider this question.

That is, Rescare did not have to consider circumstances where the specification on foot was different from the specification at the date from which the patent term runs. In Pfizer, it was found that, as the complete specification in its present (amended) form disclosed the best method of performing the invention which was known to the applicant at the date of the original filing, the patent validly disclosed that best method.

In the authors’ opinion, Pfizer agrees with Rescare that the best method to be disclosed is the best method as at the date at the start of the patent monopoly, that is the date from which the term is calculated. Pfizer simply finds that the best method may be added to the specification by a later amendment.

None of the cases in Rescare, Pfizer, Van Der Lely, Rediffusion and Servier were divisional applications. Accordingly, in those cases, the date of filing the complete application, including the complete specification, is the date on which the patent monopoly commences. References to “the date of filing”, “the date of filing the complete application”, and “the date of filing the complete specification” are synonymous with the date on which the patent term commences. In Rescare, Pfizer, Van Der Lely, Rediffusion and Servier the relevant date for the best method is tied back to the date of monopoly (i.e. the date of filing the application) (see e.g. Servier at [113] and [114] discussing Rescare and Pfizer).

In contrast, in the present matter, the relevant date for the best method has been tied to the date on which the complete specification is filed, even though this date is well after the date of the patent monopoly (the effective filing date of the divisional).

Trouble for many divisional applications

If you are an assignee who filed a divisional application without knowledge of the best method known to the original applicant, this decision will be of comfort. However, this will not be the case for many divisional applications. In the intervening period between filing the parent case and the divisional application, improvements to the method of performing the invention may come to the attention of an applicant for a divisional application, whether that applicant is the same entity as the applicant of the parent case or an assignee that has subsequently gained new knowledge since the original application date. This decision finds that applicants must update the best method when filing a divisional application. That is, the applicant must provide more information to the public, even though the term of the patent monopoly is the same as the parent application.

Applicants and patentees do not have to periodically advise the public of updates to the best method throughout the life of the patent. It seems onerous to require a party to advise of a best method determined after the original filing date simply because a divisional application is being filed.

What now?

Pre-Raising the Bar Cases

In Pfizer, it was possible to amend an application to introduce the best method, and that remains a potential option for any divisional applications under the pre-Raising the Bar regime. Consider filing amendments now to update the best method, particularly if you may wish to enforce your divisional or if the validity of it may be challenged.

Post-Raising the Bar Cases

Following the Raising the Bar amendments, amending a complete specification to introduce the best method is no longer an option. Subsection 102(1) now states:

An amendment of a complete specification is not allowable if, as a result of the amendment, the specification would claim or disclose matter that extends beyond that disclosed in the following documents taken together:

the complete specification as filed;

other prescribed documents (if any).

In Merial, Inc. v Bayer New Zealand Limited [2018] APO 14 an application was found not to have disclosed the best method and the hearing officer commented at [239]:

It is not clear to me how the deficiencies in the opposed application may be overcome since it appears that any proposed amendments would result in adding new matter that was not present in the originally filed specification, and therefore would not be allowable under section 102 of the Act.

The only way to remedy any best method issues in a pending divisional application is to file a further divisional application with an updated disclosure of the best method.

If you can no longer file a further divisional application, such as if a patent has granted, the only option now is to hope for an appeal* of this decision or abolishment of the best method requirement in Australia. This uniquely Australian requirement is proving very problematic for patent applicants, unless you are blissfully ignorant.

*An appeal seems unlikely, as the both the infringement claim and the crossclaim seeking revocation were dismissed.